U.S. Senate approves new sanctions for Iran energy, shipping

U.S. Senator Robert Menendez (D-NJ) speaks during an immigration reform rally in front of the U.S. Capitol on Capitol Hill in Washington October 13, 2009.

Reuters/Jose Luis Magana

WASHINGTON (Reuters) - The U.S. Senate on Friday resoundingly approved new sanctions on trade with Iran's energy, port, shipping and ship-building sectors, its latest effort to ratchet up economic pressure on Tehran over its nuclear program.

The new package builds on existing U.S. sanctions but keeps exemptions for countries that have made significant cuts to their purchases of Iranian crude oil. Senators voted 94-0 to make the new sanctions part of an annual defense policy bill.

Iran's currency has plunged this year as its oil exports were slashed by U.S. and European sanctions aimed at pressuring the country's leadership to stop pursuing nuclear weapons.

Iran says its nuclear program is for peaceful purposes. The United Nations' nuclear chief said on Thursday his agency has made no progress in its year-long push to investigate whether Iran has worked on developing an atomic bomb.

"We must be clear to the Iranians that toughing it out and waiting it out is not an option, that it will only get worse," Democratic Senator Robert Menendez said.

Menendez, of New Jersey, co-authored the package with Republican Senator Mark Kirk of Illinois and Senator Joseph Lieberman, an Independent from Connecticut.

The Obama administration has not publicly commented on the proposals, but has privately raised concerns that it does not provide enough "waiver flexibility," said Carl Levin, chairman of the Senate Armed Services Committee.

Levin said those concerns may be addressed when the Senate and House of Representatives work out differences to finalize the massive defense bill. The House has approved its version of the bill, and both bodies will need to approve a final version before it is sent to President Barack Obama to sign into law.

The new sanctions also include measures aimed at stopping the flow of gold from Turkey to Iran.

The American Israel Public Affairs Committee, a powerful pro-Israel lobby group, endorsed the measures, which they said would close a loophole in existing laws.

"In an effort to circumvent international sanctions on the Central Bank of Iran, some purchasers of Iranian oil and natural gas have been using gold and other precious metals to pay for petroleum products," AIPAC leaders said in a letter to senators ahead of the vote, urging support for the bill.

Whether an expansion of sanctions can actually slow or stop Tehran's nuclear program is uncertain.

Paul Pillar, a former CIA analyst for the Persian Gulf region, said sanctions will not work without solid diplomacy to accompany them. He said the leadership in Iran is unlikely to make concessions on the nuclear issue if it expects sanctions to continue until the regime falls.

"It is a fallacy to believe there is some breaking point at which the regime in Tehran cries 'uncle' and makes major changes in policy even if it sees itself as getting nothing in return," he said.

Jeff Colgan, a professor at American University who studies the geopolitics of oil, said the expanded sanctions would represent a "continuation of a cat and mouse game."

"The sanctions get placed, Iran tries to find ways around them, and the U.S. tries to close the loopholes. But so far, a dent in the (Iranian) economy has not resulted in a change in the nuclear program," Colgan said.